NEW YORK – It’s still early, but analysts’ grades already are coming in: the back-to-school shopping season is off to a lousy start.
“Back-to-school selling hasn’t really started yet,” said John Morris, BMO Capital Markets analyst, based on recent conversations he’s had with store executives. “Retailers have a very foggy picture.”
The sluggish start is expected to show up in July sales reports, to be released today, as job worries heighten.
By the end of July, sales of items like jeans and other back-to-school merchandise usually have started kicking in. But this year, it won’t be until the third or fourth week of August before stores have a sense of the best sellers because shoppers appear to be delaying their purchases, Morris said. That will make it difficult for retailers to reorder popular items.
Craig Johnson, president of Customer Growth Partners, a retail consultancy, described the season so far as “late and lousy.” He added, “Shoppers are still holding back.”
Complicating matters are several one-time factors:
• The shift of the sales-tax holidays from July to August in most of the 14 states that have them because of a late Labor Day weekend has stolen momentum from July.
• Lean – and deeply discounted – inventories are holding down sales as stores aim to protect themselves from getting stuck with piles of leftovers.
• The uptick in car buying spurred by the government’s “cash for clunkers” program might siphon away sales from other categories, said Frank Badillo, senior economist at consulting group TNS Retail Forward.
Michael Niemira, chief economist at International Council of Shopping Centers, estimated that same-store sales, or sales at stores open at least a year, will fall 5.5 percent in July, compared with a year ago. That would be slightly worse than June’s 5.1 percent decrease, according to the ICSC-Goldman Sachs index.
The figures do not include the results from the world’s largest retailer, Wal-Mart Stores Inc., which stopped reporting same-store sales figures after announcing April results.
Same-store sales are sales at stores open at least a year and are considered a key indicator of a retailer’s health.
A decline in July same-store sales would mark the 11th consecutive monthly drop when excluding Wal-Mart results – which had buoyed the industry in the spring before it stopped reporting monthly numbers.
Merchants are seeing indications that sales decreases are easing. However, business remains weak even amid signs of economic stabilization.
A worrisome sign for merchants is a 1.2 percent decline in consumer spending and a 5.2 percent increase in the savings rate in the second quarter.